Hard sell for Schwarzenegger budget

If he can persuade cinema-goers to buy tickets to Red Sonja, a much-mocked action film he made in 1985, then he can sell anything. Still, California's Republican Governor Arnold Schwarzenegger faces his hardest test: selling his first budget.

Thousands of state employees are likely to lose their jobs in the wake of predicted cuts in public services. College fees are expected to rise by between 10 and 40 per cent, welfare services for the elderly are to be cut, and an attempt made to extract $US250 million ($A320 million) from casinos run by native Americans.

At the heart of the budget, which Mr Schwarzenegger was to release early today Australian time, is a proposal to borrow $15 billion in bonds, a measure that has cross-party backing. However, this still leaves a further $10 billion to be found and Mr Schwarzenegger has promised not to increase taxes.

He has indicated he will seek extra revenue from a number of sources, including the Federal Government.

Budget leaks suggest an increase of 10 per cent in fees for all college students, and up to 40 per cent for graduate students.

Mr Schwarzenegger is likely to seek about 25 per cent of the $1 billion revenue from native American-run casinos. The casinos, on native land, do not have to pay the taxes they would if they were operating elsewhere.

One of the likeliest cuts is to a program giving health insurance to 700,000 children of low-income workers. It is understood that the new budget will make access to the program more difficult.

Mr Schwarzenegger hopes a pro-business strategy will woo back companies that have left the state. Some business people have claimed that the unions in California are too strong and payments - such as workers' compensation for injured or sick employees - are too high. Plans to end the existing arrangements are a part of the Governor's strategy.

He is also likely to seek to cut the state's massive prison budget. California has the highest per-capita prison population outside China, with 162,000 inmates costing $28,500 each per year.

Already Mr Schwarzenegger has authorised a less strict parole policy so that non-violent parolees are not automatically imprisoned for technical parole violations.

But he has had to retreat on some of his proposals. In December, he announced a series of cuts in programs for the disabled.

This led to a protest by wheelchair users outside the State Capitol in Sacramento, and a reversal of the plans with the Governor announcing that the cuts would not be "consistent with my record as an advocate for the developmentally disabled".

The California Chamber of Commerce has thrown its weight behind Mr Schwarzenegger.

Democrats have voiced doubts. Democratic Senate leader John Burton said the only way to tackle the budget deficit was by taxing the very wealthy. "We have to make sure that poor women and children are not thrown deeper into poverty," he said. Guardian